Wait & Watch To Buy Your Dream Home
Rishi and Ria are tired of shifting from one flat to another after every 11 months. They have been searching for their dream home, but the current market scenario has made them think again if it's safe to go in for a buy right now? Real estate developers and international property consultants are also keenly watching the current slowdown in the real estate sector due to an amalgam of reasons. These include high interest rates on home loans, reduced liquidity among developers because of credit crunch apart from lack of availability of affordable housing.
Being at a defining point in the history in the real estate, it's time to know as to how will the sector perform in the next year. Rarely has a business sector seen so much churn, conjecture, simultaneous pessimism and optimism and prophetic predictions in just a few months. Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj says, "Due to the ongoing inflationary trends, the Indian real estate sector is likely to under-perform for at least the next six to 12 months. During this period, investors are well-advised to concentrate only on key listed players who are better placed to ride out the storm by virtue of their unique business model or via tactical strategy shifts." Industry experts believe that in the residential space, developers must now be ready to lower their selling prices in order to revive demand as end users are only waiting for this to happen. Once this happens, an upswing in residential real estate sales will be seen again.
Sanjay Dutt, Managing Director, Cushman & Wakefiled says, "Real estate market will be strong here in the long term. Developers should not tie-up with many private equity players, but only with the select few reliable ones. They are tapping several opportunities to de-risk through alternate routes including selective private equity players apart from partly selling their finished products or projects." For instance, Delhi-based Uppal builders -- who are into residential and commercial developments -- have also forayed into development of special economic zones (SEZs) by tying up with Vornado, (specialist in developing SEZs) of USA.
At the recently held India Retail Forum (IRF) in Mumbai, Ireena Vittal, partner, McKinsey & Company said, "The real estate and the consumer durables segment can witness inventory pile up in the next 12 months. Meanwhile, infrastructure sector will grow at 15% additional rate." There are, without any doubt, a few pockets of excessive supply in both residential and commercial space, but the overall demand still remains largely unaddressed. There is still a huge demand for housing or office space in many parts of the country, but improper pricing and a faulty product mix are proving to be stumbling blocks. India -- and for that matter China --represent an economic scenario that has evolved separately and on very different parameters from the economies in most of the developed countries. India is an emerging economy, with an emerging and maturing real estate market. The fall in demand will prevail for approximately 10 to 12 months, but it will not be of a magnitude comparable to that of other countries. India continues to be very attractive, but foreign investors are now justifiably awaiting greater transparency and stability.
Still, prices are doubtlessly stagnating and there may be a more generalised correction over the next one year, feel industry experts. The retail and commercial space sectors have seen a sea change on the demand side, completely redefining what is expected from the coming supply. No longer can we adhere to traditional standards of format, efficiency and location -- everything is changing and we must change with the times. In fact, our thinking must now permanently re-orient to global best practices and eco-friendly projects with Leadership in Energy and Environmental Design (LEEDS) certification.
In the retail sector, the sad truth is that there is an oversupply situation brewing, mainly because the current supply is opportunistic and not based on actual demand. Developers are building malls in catchments where land is available, without studying existing and potential demand. "Every retailer should know and understand its customers well. Otherwise he will never be a successful retailer." This was stated by Kishore Biyani, founder and CEO, Future Group at the (IRF) in Mumbai.
According to Puri, "In residential real estate, most development houses have realised that affordable housing projects have the fastest absorption rates and are focusing on this hitherto neglected sector." Also, quality retail and commercial spaces in tune with the international blueprint are arriving, and developers are now launching housing projects for the common man.
The government must do its part by addressing the many complexities and ambiguities in indirect taxes. SEBI has taken a decisive step in formulating its draft regulations for Real Estate Investment Trusts (REITS), giving this investment route further form and shape. REITS will serve as a realistic real estate investment options for investors at all levels and help infuse badly needed money into the sector. Dutt summed up, "Today, real estate developers are willing to enter only those projects which can be purchased, built and sell off quickly and make money. Developers have started believing in futuristic games."
Being at a defining point in the history in the real estate, it's time to know as to how will the sector perform in the next year. Rarely has a business sector seen so much churn, conjecture, simultaneous pessimism and optimism and prophetic predictions in just a few months. Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj says, "Due to the ongoing inflationary trends, the Indian real estate sector is likely to under-perform for at least the next six to 12 months. During this period, investors are well-advised to concentrate only on key listed players who are better placed to ride out the storm by virtue of their unique business model or via tactical strategy shifts." Industry experts believe that in the residential space, developers must now be ready to lower their selling prices in order to revive demand as end users are only waiting for this to happen. Once this happens, an upswing in residential real estate sales will be seen again.
Sanjay Dutt, Managing Director, Cushman & Wakefiled says, "Real estate market will be strong here in the long term. Developers should not tie-up with many private equity players, but only with the select few reliable ones. They are tapping several opportunities to de-risk through alternate routes including selective private equity players apart from partly selling their finished products or projects." For instance, Delhi-based Uppal builders -- who are into residential and commercial developments -- have also forayed into development of special economic zones (SEZs) by tying up with Vornado, (specialist in developing SEZs) of USA.
At the recently held India Retail Forum (IRF) in Mumbai, Ireena Vittal, partner, McKinsey & Company said, "The real estate and the consumer durables segment can witness inventory pile up in the next 12 months. Meanwhile, infrastructure sector will grow at 15% additional rate." There are, without any doubt, a few pockets of excessive supply in both residential and commercial space, but the overall demand still remains largely unaddressed. There is still a huge demand for housing or office space in many parts of the country, but improper pricing and a faulty product mix are proving to be stumbling blocks. India -- and for that matter China --represent an economic scenario that has evolved separately and on very different parameters from the economies in most of the developed countries. India is an emerging economy, with an emerging and maturing real estate market. The fall in demand will prevail for approximately 10 to 12 months, but it will not be of a magnitude comparable to that of other countries. India continues to be very attractive, but foreign investors are now justifiably awaiting greater transparency and stability.
Still, prices are doubtlessly stagnating and there may be a more generalised correction over the next one year, feel industry experts. The retail and commercial space sectors have seen a sea change on the demand side, completely redefining what is expected from the coming supply. No longer can we adhere to traditional standards of format, efficiency and location -- everything is changing and we must change with the times. In fact, our thinking must now permanently re-orient to global best practices and eco-friendly projects with Leadership in Energy and Environmental Design (LEEDS) certification.
In the retail sector, the sad truth is that there is an oversupply situation brewing, mainly because the current supply is opportunistic and not based on actual demand. Developers are building malls in catchments where land is available, without studying existing and potential demand. "Every retailer should know and understand its customers well. Otherwise he will never be a successful retailer." This was stated by Kishore Biyani, founder and CEO, Future Group at the (IRF) in Mumbai.
According to Puri, "In residential real estate, most development houses have realised that affordable housing projects have the fastest absorption rates and are focusing on this hitherto neglected sector." Also, quality retail and commercial spaces in tune with the international blueprint are arriving, and developers are now launching housing projects for the common man.
The government must do its part by addressing the many complexities and ambiguities in indirect taxes. SEBI has taken a decisive step in formulating its draft regulations for Real Estate Investment Trusts (REITS), giving this investment route further form and shape. REITS will serve as a realistic real estate investment options for investors at all levels and help infuse badly needed money into the sector. Dutt summed up, "Today, real estate developers are willing to enter only those projects which can be purchased, built and sell off quickly and make money. Developers have started believing in futuristic games."